Surplus power generation in Pakistan: New problems

[Falcon26]

Nation Plagued by Power Shortages Suddenly Has Too Much Electricity
Faseeh MangiJanuary 27, 2021, 12:52 AM EST

• Government to pay power producers $2.8b by Dec. to cut tariffs

After spending decades tackling electricity shortages, Pakistan now faces a new and unfamiliar problem: too much generation capacity.

The South Asian nation’s power supply flipped to a surplus last year after a flurry of coal- and natural gas-fired plants were built, mostly financed by the Belt and Road Initiative launched by Chinese President Xi Jinping in 2013. Pakistan is slated to have as much as 50% too much electricity by 2023, according to Tabish Gauhar, special assistant to Prime Minister Imran Khan for the power sector.



That is problematic because the government is the sole buyer of electricity and pays producers even when they don’t generate. To help tackle the issue, the government has negotiated with producers to end that system, lower their tariffs and asked them to delay the start of new projects, according to Gauhar. It is also trying to convince industries to switch to electricity from gas.

“We have a lot of expensive electricity and that is a burden,” he said.

While the Chinese financing and the surplus is a welcome change after years of shortages that left exporters unable to meet orders and major cities without electricity for much of the day, two main problems remain. The first is a creaking network, and the second is the need to supply cheaper power while keeping emissions in check.

“Pakistan has overcapacity, yet it still has power shortages because of the unreliability of the grid,” said Simon Nicholas, an analyst at the Institute for Energy Economics & Financial Analysis. “They haven’t invested in the grid the same way they’ve invested in power plants.”

The last nationwide blackout happened just last month after an outage at the country’s largest facility. While the new plants have also boosted coal generation to a record fifth of the power mix, Pakistan plans to increase the share of wind and solar to 30%, while another 30% will be generated from river-run dams.

Pakistan will pay private power producers 450 billion rupees ($2.8 billion) in overdue electricity bills in a deal to reduce future tariffs. The government targets to pay 40% of that bill by the end of February, with the second payment slated before December, according to Gauhar. A third of the payment will be made in cash, with the rest in fixed income instruments, he added.



About 8 gigawatts worth of government-owned power plants will also have tariffs reduced. And Pakistan plans to negotiate lower tariffs for mining and power generation at the Thar coalfield, said Gauhar.

The government aims to delay about 10 gigawatts worth of planned power projects, including coal and wind plants, since there won’t be any need for them next year, said Gauhar.



@Bilal Khan (Quwa) @waz @Riz @Trailer23 Why does the government need to buy power from the suppliers? Why can’t they sell electricity directly to consumers? Doesn’t seem like a smart idea for the government to incur billions of USD each year buying electricity from the power suppliers, especially now that there’s a surplus. What’s the benefit? Any economic explanation behind this?

 

[PakistaniAtBahrain]

The first is a creaking network, and the second is the need to supply cheaper power while keeping emissions in check.

i suppose the grid problem can only be fixed by investing money into it. but wont the cost of electricity reduce over time as the share of renewable energy in the total mix increases?

 

[vi-va]

Pakistan electricity per capita is still low

Pakistan electricity per capita is still low

https://ourworldindata.org/grapher/per-capita-electricity-consumption

defence.pk

Per capita electricity generation

Annual average electricity generation per person, measured in kilowatt-hours.

ourworldindata.org

 

[Falcon26]

Pakistan electricity per capita is still low

Pakistan electricity per capita is still low

https://ourworldindata.org/grapher/per-capita-electricity-consumption

defence.pk

View attachment 713444

Per capita electricity generation

Annual average electricity generation per person, measured in kilowatt-hours.

ourworldindata.org

I think this is due to transmission issues highlighted in the article.

i suppose the grid problem can only be fixed by investing money into it. but wont the cost of electricity reduce over time as the share of renewable energy in the total mix increases?

I don’t think that will make much difference because the government will be buying from the power providers to supply to consumers. Why does the gov’t need to waste billions each year being an unnecessary middleman? Where else can pakistan spend that $2.8-billion? I would imagine that would be money well spend on education and healthcare.

The government is paying the power producers even when they don’t generate power. This is insanity.

 

[313ghazi]

Pakistan electricity per capita is still low

Pakistan electricity per capita is still low

https://ourworldindata.org/grapher/per-capita-electricity-consumption

defence.pk

View attachment 713444

Per capita electricity generation

Annual average electricity generation per person, measured in kilowatt-hours.

ourworldindata.org

It is. Unfortunately our economic activity is even lower, hence we're not using all we generate.

 

[Indus Pakistan]

government will be buying from the power providers

Please tell me how many power generating companies in the world you know who would be prepared to invest even a cent if they knew they would have to collect their bills from the Pakistani consumer? NON.

So I suspect when the country was in dire shortage of power the only way of attracting investors was if the government agree to be contractually bound to buy and pay. That would leave the collection problem in hands of the government.

 

[vi-va]

It is. Unfortunately our economic activity is even lower, hence we're not using all we generate.

In China, we had electricity surplus around 2000s, there was debate on how many more power stations we need for several years, and then suddenly China was in electricity deficit, a lot of economy activities were forced to stop, huge negative impact.

After that, China built a lot more power stations, we have electricity surplus until now, never want to experience power shortage again.

Electricity generation

Measured in terawatt-hours.

ourworldindata.org

 

[xuxu1457]

With the development of economy, more and more electricity will be needed.The demand for electricity is always increasing.
Strong economic demand has allowed China's electricity production to increase by 15% per year annually for many years.

China's residential electricity consumption accounts for 15% of the total electricity consumption, agriculture accounts for 1% and industry accounts for 65%，Services 19%，Residential electricity is a priority, and I haven't had a blackout for more than ten years. So even some English media say that Chinese residents are short of electricity

 

[Indus Pakistan]

Let me give you guys a personal example. I have always been a British Gas customer. I never thought about it and since back in 1980s it was a national monopoly we all had only British Gas as customer. Hoewever over the years private companies were allowed in to the energy market.

Recently I was feeling the pinch with energy bills. So I saw this internet site that offered cheaper energy. I used it and the lowest prices [almost 40% cheaper] were offered by Avro Energy. When I applied to them I was subjected to credit, ID and energy history checks. At times I felt it was like I was applying for a bank loan. When I eventually passed they took me in as customer.

Apparently the reason was Avro work on minimum cost. That means small workforce, lean operation and only customers with good credit records with monthly direct debits where you pay first. This means the company does not pick up the costs/bad debts from bad customers.

British Gas by law are required to provide power to everybody so they lose lot of money on customers who don't pay or chasing them for debts or installing pre-payment meters. Companies like Avro would scream if the had to put up with the Pakistani market.

And guys my monthly energy bill - electricty/gas is fixed at £143 per month.

 

[FuturePAF]

Along with upgrading the grid (and asking China to buy our excess electricity through a grid connection, We should consider using the excess electricity to do greenhouse farming with LED lights. If the yields justify the cost, it’s will at the very least for the government take the burden off electricity projects becoming a money pit.

If we consider how much light (and at what wavelengths) actually makes it to the plants, and we can invest in climate controlled environments with LED lights, that can generate high yields, it could be worth it.

 

[krash]

The surplus is due to entire industries having been reduced to dust by the decades long shortage.

@Bilal Khan (Quwa) @waz @Riz @Trailer23 Why does the government need to buy power from the suppliers? Why can’t they sell electricity directly to consumers? Doesn’t seem like a smart idea for the government to incur billions of USD each year buying electricity from the power suppliers, especially now that there’s a surplus. What’s the benefit? Any economic explanation behind this?

Thank PMLN for that. There are power plants that were funded by the government through the direct tariffs it imposed on the public. Their running cost is also partly paid by the public. Guess who owns them? Private owners who run them at half capacity because running them at full capacity does not maximize their profits.

Imagine building your neighbor's house with your money and then paying rent on it even when you're not living there.

Pakistan electricity per capita is still low

Pakistan electricity per capita is still low

https://ourworldindata.org/grapher/per-capita-electricity-consumption

defence.pk

View attachment 713444

Per capita electricity generation

Annual average electricity generation per person, measured in kilowatt-hours.

ourworldindata.org

The data shows per capita consumption not capacity.

 

[vi-va]

The surplus is due to entire industries having been reduced to dust by the decades long shortage.




Thank PMLN for that. There are power plants that were funded by the government through the direct tariffs it imposed on the public. Their running cost is also partly paid by the public. Guess who owns them? Private owners who run them at half capacity because running them at full capacity does not maximize their profits.

Imagine building your neighbor's house with your money and then paying rent on it even when you're not living there.



The data shows per capita consumption not capacity.

Pakistan should build more energy consuming industry to fully take advantage of the CPEC, those power stations, grid, railway is a tool, now it's time for Pakistan to pick the tools and have more factories set up and running.

 

[313ghazi]

Let me give you guys a personal example. I have always been a British Gas customer. I never thought about it and since back in 1980s it was a national monopoly we all had only British Gas as customer. Hoewever over the years private companies were allowed in to the energy market.

Recently I was feeling the pinch with energy bills. So I saw this internet site that offered cheaper energy. I used it and the lowest prices [almost 40% cheaper] were offered by Avro Energy. When I applied to them I was subjected to credit, ID and energy history checks. At times I felt it was like I was applying for a bank loan. When I eventually passed they took me in as customer.

Apparently the reason was Avro work on minimum cost. That means small workforce, lean operation and only customers with good credit records with monthly direct debits where you pay first. This means the company does not pick up the costs/bad debts from bad customers.

British Gas by law are required to provide power to everybody so they lose lot of money on customers who don't pay or chasing them for debts or installing pre-payment meters. Companies like Avro would scream if the had to put up with the Pakistani market.

And guys my monthly energy bill - electricty/gas is fixed at £143 per month.

You must have a really big house, or poor insulation. Mine's £70 a month, although this month i paid £150, it's been very cold. My parents have quite a large house, they pay £200 a month, but they also want the house to feel tropically warm inside!

You make an excellent point about how private energy providers work in the UK though. I think someone should setup that model in PK, target richer customers. Mind you i highly doubt you can get an accurate credit rating in Pakistan.

 

[OldenWisdom...قول بزرگ]

There is no such thing as power surplus. It means Pakistan is not keeping pace with production... world is fast moving towards electrification, that means transportation both public and private, industrial and commercial finally residential.
Though, I don't know how it is setup but each grid is generally separate to calculate demand and project future production.

 

[Samlee]

Immediate 1500 MW To K Electric And Phased Transfer Of Industries From Captive Power To National Grid Would Help